ENSV - Earnings call transcript Q3 2017

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Operator

Greetings. Welcome to the ENSERVCO Corporation 2017 Third Quarter Earnings Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host Mr. Jay Pfeiffer, from Pfeiffer High Investor Relations. you. Thank

begin. may You

Jay Pfeiffer

Peitz, to behalf XXXX are of Franciscus, and CEO; welcome Operations. of call. Ian quarter Presenting Tucker Austin Officer; Financial on the Chief Vice the and President third Field ENSERVCO's conference Dickinson, Senior Hello, company today

statements based matters of are XX-K today's and point are which to results management's a that call. be date I'll disclosure statements call untrue subsequent to reminder, ENSERVCO.com non-public in may materially uncertainties forward-looking and other events. that during that to filings SEC The of will as out certain SEC. is Reg become forward-looking FD, risks the well recent during at prohibits from and today's as discussed of those As estimates, assumes company's disclosed anticipated no forward-looking call actual its projections this cause because the include also the that risks ability on ENSERVCO limited after call as by available most this to questions information. could business replay selective statements. in to assumptions management's subject differ is A respond webcast with material obligation company's update of to subject

in In Ian available to call. today's two will please over news Instructions I'll addition, a With the or be Ian, the call are telephone release. approximately hours go for webcast after replay available beginning replay accessing turn Dickinson. the ahead. that,

Ian Dickinson

a XXXX again non-core mind downturn. one reflected our of increased the quarter from activities year in customers quarter year achieved marked X.X included prices third drilling, in by of our took we in and but in commodity million modest off everyone once form by retain over Welcome ongoing keep QX it maintenance revenue year order to in key growth completion slowest we consecutive the Jay. what is our the stability construction last quarter a third driven tail-winds during that of call. of year's X% earnings to typically Thanks, total the our macro revenue revenue quarter increase and project third employees and

So, when services revenue by apples third total quarter in XX%. the apples an our to basis core increased on revenue comparing

services year up way hot operation. our cases heating while despite in of Harvey Our well enhancement year of Texas the area increase frac in and and over which of water impact made a worked segment oil the led XX% with flowed acidizing Hurricane it some

on profitable strategic with in best a million Many the important contributor in recall you the public conducted CapEx success but of term revenue a in adjusted a Our numbers essentially new that utilization first undertaking to we company through its an as in the in to revenue water Based year delivered be growing dive Tuck the will the long growth fleet. of nearly to just I on a provide mix detail the more to period last our $XXX,XXX transfer drive in update same the at business into to are continued also none quarter year. want moment versus in that prior size when Enservco $XX.X increased of downturn of $XX.X our EBITDA. and the million XXXX doubled fleet. company initiatives

think vortexes we believe drilling the improve at capitalizing We're brought key opportunity We successful activity revenue in double business on as our new based quarter diversified an sweeping to $XX to that and mind with changes growing carrying and a XXXX, everyone we larger to programs [indiscernible] with increased cost operations sales excellent completion increased the and is maintenance capacity. our services this aligned and larger polar recovering development we safe During fleet execution an and market locations. don't play represents I share for managers our saw marketing and last calls closely this typical The business for with significantly with sales goals range measurable represented capacity sales this ensure prices Austin with potential now barrel. and in delivering doing accountability. in term line of and organization making across $XXX we to the are formal our develop our our to We and in to need earnings. drive subsequent we look overwriting $XX oil. focused goal earnings this objectives. on dedicated winners the and managers a mix, to commodity as down need a to on work excess utilization oil sales have higher in the we're of now bottom We We to conduct the operations organization, our opportunity we based rates fleet a for but with to reputation revenue district have service, nearly and VP but alluded establishing programs all partnering metrics on leverage performance quarterly customer

This most fleet down also give our shift progress sales and We help we utilization company growth. for the cultural implemented across This and can takes - a a deployment service quickly introduce and monitoring debt, new cash profitability our maintenance continued us to will is ENSERVCO's current ultimate to improving additional transfer implementing we're for time objective changes are water buyer as end. pipeline constitutes improve sheet of by logistic year major services such have to drop lines strengthen the new and we all to and making balance position use customer to added system flexibility the reporting better but business. respond to and expect to are internal all and and demands. unit the Again flows pay forecasting manage ensure good

we customers. We EMPs have are an majors the and the our incredibly are customers with we focused smaller independents in new along adding on of United have States leading comprised Remember base of expanding valuable and every we with the customer many of relationships quarter. each

increase more and adding them, on of a service we services of our couple the more benefits new of to customer strategy have the we opportunity us. for lines subject that the per offer can revenue So

legacy offering year new objective more bottom a it top and investors to services simplifies by and customers lines. allows multiple year second are distributing throughout due supporters and with a us their cause but provider the on to transfer confusion and removing our with offer the business water us fluctuations new revenue to single which lumpiness large the evenly First some service procurement around when process the consolidating like is

my comment our issue the morning. wrap press briefly to I I loan remarks, want this Before covenant release on referenced in

coverage fixed traditionally and our first quarters. During what slowest is quarter slower quarter on we the third ratio our fell short calculated of was which always our second first XXXX and which records on charge strong included

result into will a an closely allow lender we're get compliance. as us will we to So working and have place soon back believe our with that amendment in

our a us months will we're to but the on charge to on coverage which our working calculation. will the QX based reflected a we gives increased trailing the in having solid This we testing compliance and XX quarters November that our the we as in September, December Specifically ratio be fixed short XX. demanding classified for by waiver for have and resume meantime full us pipeline of October debt believe fourth our to of In on back get allow stronger calculation expectations benefit first year-end. testing term and

today. the call I'd there three like away So to things in from take are summary

into three reported quarters we we a move revenue and consecutive busy trend First, that we be growth of what heating season. our see should continuing as year-over-year

of Second, utilization customer with lastly, rates can standard leverage we in levels track higher implementing optimize business organization. a including development across our operations company industry we fleet better to driving the XXXX and we record are base process our activity help the increasing believe and implementation

over Austin I'll activity that Austin? provide areas and color various to it operation. some on customer So of to turn

Austin Peitz

Thanks, Texas. on the all during Pennsylvania some quarters solid Even been year. key heating today eight we services water same found haven't by a Colorado, we work in in we're seen the levels of in looking Breaking two you lines it so over has strength in our in last while. or had North give for uptick frac the increase pay of particularly working service at down none and in which idea we frac tanker Dakota, couple equity total an increasing Ian. demand commodity years higher and to heating contracts Oklahoma time we last our of that next With whereas basins the we at tough crews see prices the a a an an increased have water

segment right feel we about So this now. very good

areas a whereas in majors Dakota, Oklahoma New heating We it and activities seeing the increased area. awarded four all new have following working between were Austin to is time an year with We've crews same customers in averaged and strong seen the last we the we project years added currently ranging Colorado, keep North recently we on where single call is seen the Texas in and due with have rise also the X.X in customer. Basin next the Harvey. and is that from very way the with small Rock a crews are work well. with Ford customers year for Oklahoma, also first in slowdown major also in independent. throughout Eagle activity Springs awarded and North from also the customer will Dakota River producers two continuing in all Hurricane legacy [Indiscernible] Mexico to full Chalk over Colorado both three other to a in work Basin DJ were we as more producers in more and at Wyoming strengthen, uptick Powder

both well. we come Texas in around with producers. activity On division drilling have and maintenance for discussion Kansas the the story future. our impacted focused general also on with the start an resumption we're work we and Enservco, hoping for MSA also a into Oklahoma with be Basin continues and had to done delays along We're in where cancellations as activity being other a in the others. some acidizing in hurricane third RFP in to transfer success on never nice supporting we We're frac in Colorado's due as working as regular [indiscernible] primarily signing work and near several their seeing provided also with work and programs DJ Wyoming maintenance the a we're quarter of large large the and little deep several affidavit that of Water process increase back for operator major new very well

it turn the to our the utilization incorporate to an We to we be water results. With as time that over I [ph] early transfer will increased Tucker? service out lumpy in and smooth over year expect across but base Tucker financial summarize rates.

Tucker Franciscus

$X.X that. ago again during $X.X Austin. third X% in revenue $X.X the same increased Total from one-off we a Thanks, million year of Appreciate contract quarter quarter year included QX million in took to million and downturn. last a the construction from

currently We work of pursuing are construction any this not type. additional

focused by services our will to on X XX% million from hot XXX,XXX X.X well million. over year frac Going be heating million acidizing to $X.X and we million, oiling enhancement X.X from year included QX XX% down in that XX%, forward up X.X XX%, from grew which water up million

negatively revenue in in in segments XXX,XXX versus of extension comparable no year. of transfer year. revenue mentioned Harvey. last by XXX,XXX increased in work As versus Operating temporary loss quarter profit QX acidizing Water QX was Hurricane XX,XXX last the due operating was to an enhancement well impacted

as a continues XX,XXX in an carrying equipment showed product and to second due to hydroflow personnel bright line. water The well spot the but costs as transfer us of for be loss operating

profit We QX XXX,XXX. operating to amortization in General from team. to an QX. higher Total in million with revenue investments comp hydroflow X.X of million expenses insurer. to continue cost had was maintenance million. was the $XXX,XXX in the year reversal and claim the and for at were the to customer administrative and down segment third to evaluate denied year for of to due X.X and hauling the We XXX,XXX in associated primarily by XXX,XXX since a prior X.X X% with been operating demand from anticipated activity the Depreciation this in increased accrual the up has hydroflow relatively flat slightly worker's expenses in conjunction opportunity Water XXX,XXX due to to fleet X.X quarter quarter. increased gear up million expense fourth over primarily a that

quarter $X.X The per X.X of X.X million EBITDA last third loss the quarter the year. diluted million or with quarter X.X or a comparable per diluted versus net in share in last was QX year. $X.X same negative million share net X.X versus million a loss adjusted

components and through XX.X XX.X X.X net enhancement led acidizing revenue to previously million, year. million in last operating results, period XX% nine-month this Operating profit XX% from million in million expenses same increased from through with XX% period million declined of in million million incurred to from costs X.X to the year cited. total to company last We X million nine XX.X with per XX,XXX demand to same Net $X.XX same the services administrative due quarter up improved from to by well EBITDA million diluted year-to-date million due segment expense year. hauling segment share X achieved increased operating year XX% from million transition million maintenance increased period from declined year. now or XXX,XXX way $X.XX a negative from X.X again to enhancement Turning share in and XX for activity, loss Total same revenue year loss costs from to QX. Core X.X million. increased rose X.X in XX.X XXX,XXX. up last from and amortization investments was months Water X.X a X.X to the XX.X to to increased associated the million expenses Water million revenue services reported million heating revenue last million year over year last was well XX% loss from adjusted hot nine the X.X and year. X period to to reasons same severance million. to All a The to X.X showed increasing Depreciation swing date XX.X months Frac sharply waiver million per from diluted positive from million segment XX% million X.X X.X of General of to XXX,XXX year. million in increased the year. X.X and three X% million. last the or the million, an million transfer a management growth. good oiling X.X XXX% in X.X in in to period and preparation related in X.X in and revenues the over slightly from fourth up

quarter. remains Our from essentially unchanged fleet last

primarily will be capital related Our CapEx. spending through year-end to maintenance

part driving service we the costs, mentioned for of in to we the Ian organization without for focused over As profitability With business, turn to that look or safety questions. as are to operator continue on the that we ways reduce the will quality. throughout drive Operator? impacting call efficiencies

Operator

Instructions]. [Operator

the question. question your first Pacific Capital. Pavani Bhakti Please comes Euro Our of from proceed with with line

Bhakti Pavani

are to have for current the there talk the right improving mentioned and remarks start the see frac to the about now what Could often and you better Just heating you you do strongest rates about maybe quarter? are them and QX quarters company QX water in [indiscernible] over the the talk how guys a that business. much seen utilization

Ian Dickinson

water We are still specific just getting the is frac into colder do notably to increase of rates that to Bhakti relatively winter. utilization heating low and the Well move anticipate utilization the season months the started.

don't an November So specifically utilization is seeing in increasing trend. I know we're in terms and utilization but exactly October of where

Bhakti Pavani

the that say California. was it winter I mean least began at looks mean at going to I warmer I least it's Yes, in with like here

is So all sort specific to mean location trend this your you location it geographic over just the customer that weather of is are area? client overall I or noticing

Ian Dickinson

a same weather our than wise that time is say off year. would start I better last to winter Well

and of to of in. out the can in kind seeing and weather day day active encouraged we're the to you we to you this so me, start that for by Austin comparable we're in here that are terms shift temperatures basins a last and getting So this but but time year the winter colder confirm

Bhakti Pavani

entirely Q XX some do business business know QX in I'm to into kind work due from spreading guys of well? point do or Okay, you as come wondering X that acidizing just you back anticipate down so that [ph], in you the to hurricane I anticipate postponement had

Ian Dickinson

mentioned acidizing work with downturn some delayed the already a of the We Austin mostly back it acidizing in of well have was the kind short-lived so South but as online there was work it that shutdown associated temporary Texas. as it and seen with of also a and [indiscernible] downturn work larger relatively recovery their maintenance hurricane, come that's customers was so

Bhakti Pavani

the improvement negotiate do the that regards With same in you or witnessed to last pressure seen you now year? have to been pricing you activity or any improvement pricing better prices of you kind have able see in

Ian Dickinson

let seeing would It some really this opportunities a varies in a here Austin slight statement, bit pricing. on was maybe service it I will too time a basin say as weigh slight I some a in improvement and improvement. to as year last and general we're but comparison

Austin Peitz

has elaborate kind and each seeing sort for parameters area of he we're improvement geographic what its own flat. Correct that it's each what it's on is basin to say opportunities some little of to so exactly, staying specific

So like us. positive news the board it's looks all ahead of but of kind over there's

Bhakti Pavani

see the loss like Perfect. that profit of kind that because transfer gross revenue, up at I doing of is in and what but it are business line wondering see really still are water I'm a expanding the that picking in business revenue you could looks generating trend do level business? gross you the

Ian Dickinson

growing rates low our for that question transfer still we're XX% in water utilization Bhakti, kind range. to segment, while seeing answer asset XX% our to it's is revenue that of relative So in that

XX% production. with cost rates gross the we the of start in-excess riding those start at profit we seeing and fleet. large kind saw was challenge utilization associated as costs carrying The of we'll So low driving some

basis project profitability project we're those given of per targets drive the we're ability gross after. seeing as it think a on on unit margin to So any that

Bhakti Pavani

about on did services anticipate or with know this the guys quarter you new or and you revenues worked maybe you providing, that next provide making you it. kind haven't do contract what that Got some on that as you getting customer quarter? would Also of more to details you and this you before, any mention our could be in

Ian Dickinson

think water of Yes, heating of there's details customer both specifically kind opportunity all an expectation and transfer without we who that there them with but with our and assurances opportunity specifically some frac be is is, sharing across the around that of water services, this it on quarter, we any work will conversations this on customer at our of based in is fourth don't level that point. have there

Bhakti Pavani

the question another from? to that slide presentation the just One is you that million, going acquisition kind it. any include organic see growth the the Got revenue XXX while is I'm and through it's acquisition growth of presentation just assumption do and how curious that shows a any organic there of where and or does on of coming

Ian Dickinson

service I'm unit I fleet hauling per want very remains. units is we the XX I've water at rate to capacity saw earning we if base would assuming something compression that make to take so brought to average for slide XX% revenue at unit level what applied double business of $XXX which closer is XXXX glad XX% taken unit that presentation we've comes XXXX normalize what also and simply it that for to average apply today, what and million which that I out revenue So the levels that it exactly very adjusted is to high looks a current What be it's that XXXX because what at and and is sure to mitigate then continuing and XX% XX% at to simply off we that or that compressed in is we communicating done the soon is slide capacity done price on so roughly per the such earning we've Bhakti it I've simply as clear total earlier million. you of revenue to from mentioned just compression the to you up, XX sit by a it as looking unit the per average in million

not XXXX, fleet price transfer that Texas South in is current when base, of out simply EBITDA. and assets it to million, XX make the sense? we believe the not XX any late and saying with expectation of in in trying get early XXXX the current set of compression with guidance, it's explosion So has it's there, as represented our and Does earning is slide that XX the addition that water and we'll and mid-XXs million this top for our line capacity adjusted to when of

Bhakti Pavani

average that or level is it's at the your for the because quite when based unit clarification really revenue that know so can make current much money Thanks that actually how per confusing this applied been top that to fleet was you Absolutely. what correct? has make utilization how it's helpful to so can your is on much you

Ian Dickinson

benefit Correct. 'XX, for there just our And 'XX. late it's to is we that understand fleet think in important increased our early having to investors

and equipment we have ancillary than we more significantly prepared small had goal add the maintenance XXXX that having the where our and in some we right earning the on execute the the it the is driving business CapEx today in As mentioned additional saw purchases, maintaining on two we years just over capacity on we any to took focus [indiscernible] XXXX. without sit our but equipment to utilization and last our company rates has equipment back company downturn pressure of comments

Bhakti Pavani

is strategy the With revenue, an plan line? to it thought I your to know currently regards you or that perspective? do it but from making I business, the is your ongoing it. business intend hydroflow business you about has with business guys what's going mean be any for to what cost Have associated keep not

Ian Dickinson

very working We're exactly in team. productive on We're very that. conversations with intently the hydroflow

structured we're like that might a series going on very whether that what but of not contributing forward. look with vetting profits clarity detailed or or that a conclusion to come of our we the more through pilot see been on not and have revenue I We customers strategy in will be next a and service call. have have time projects way involved will that in we to we a line on going handful forward

Bhakti Pavani

the CapEx and One - what's expected do time? budget are opportunities last your to any from related you you actively one CapEx, my this side, looking guys for at it M&A

Ian Dickinson

similar The answer to more the we're and we've primarily budget maintenance did focused your levels We in may based fleet we up be CapEx seen the XXXX levels maintenance somewhat you ready question, get be of which historically. know first fact work variable to obviously in utilization that CapEx lot but go. the is don't have entire on is on we'll any in a working equipment, the more required to

have a those do similar made regime of investments lot been to we continue a moving but So forward. plan

be our down I any we're We with program set question large to and utilization, that in of small earlier looking footprint equipment for other contexts business, right your but we regarding that expand pursuing remarks. current CapEx amount the in for to is of aside for answer and M&A present focus what but opportunity with prepared current 'XX itself drive a of to mentioned to and each not have ways did the prospective in is of I To the as actively into 'XX. would expand M&A now or our words share nothing delevering think there as M&A, that both will Does similar fall those Bhakti? debt services assumed the parameters ancillary wallet may paying customers the customers there We opportunities question capital be for opportunities. will in new purchase mentioned looking perspective we

Bhakti Pavani

and you providing does, I answers. my it. I giving detailed It that's Thank side. it from much appreciate for guess very or

Ian Dickinson

Appreciate it much. very Bhakti. Thanks,

Operator

comes Our your [indiscernible]. next question. from of proceed Please line question the with

Unidentified Analyst

the I obviously as eyes be relates on or could it QX. you loan are just you level debt, related debt business as a then you allocation priorities just the the run it just outline maintenance and they the in to comes had what and think couple you as assuming first some anyway, can around do to capital would through get was the appropriate and delever QX your the I just could of you loan,

Ian Dickinson

effectively it's Yes, a to capital need busier facility equipment the as season. so capital predominantly we the the AR&R is our us debt to allow working [ph] there ramp again working borrowing it where and line into the base will

of our I facility. CapEx, CapEx a that working facility needs, not really part question. your spend a each of to need so year the more the is mean think million years, we've around couple with focused again it's that earlier the 'XX capital undertook of investment Our the effectively maintenance around last small debt downturn CapEx related I to early debt core is second line I use but there carried relatively to of balances we we CapEx the the that and base 'XX again The mentioned make our was in original was through so that XX that predominant mark and that late

right? the level is around that Your think what for debt the I appropriate question business, is

Unidentified Analyst

Yes.

Ian Dickinson

we interesting and levels the equipment year So on a so major project of have to two to you is than debt should return one it terms investment depending where call simply on any utilization of would take cycle an appropriate say metric I on that's for are if pieces really a we utilization be these want one of on a capital depending debt business know you looking on wouldn't again in strategic see at of what on two that think return CapEx amount a to two kind what's about a of within period depending or should any be we on and to one year that level. invested more that payback

is delever be because careful two am is one I that focus what So to what my business. general of my giving know turns the to level sense be sense is to want is targeting. that that's think you our we'd debt I and I appropriate

Unidentified Analyst

so a low got cyclical XX could that could utilization. Yes, but I is I you run-rate do XX from your now you is business mean be if last for the full months number - barely north of very mean that is anywhere potentially

looking a mid-cycle at number more into number So are you too? like for to run that

Ian Dickinson

but If would is Yes, really clear to lines, that way service I've example to the right, take like all we metric belief two the equipment debt on any I the terms of want to get this here down that to to important just is new only new get I mean on us it its so the capital expand see metrics is debt continue to on us indefinite drive we EBITDA our primary for point. will future for down. that described, and that not again one would I It within the were goal projects, to that balance eventually be do

Unidentified Analyst

waiver, put question in you place that it it been in you something has And on quick just put just on one the was not the it. that something long, could there facility mean they place when you I did when when or waiver change like between this sought underwrote and

Ian Dickinson

to described the full typically that's and quarters trailing will months - that working is stronger to our Well calculation think include of a important get with fourth we the to will know first lender XX and once you a that of think of I've so that as I intent XX include as takeaway trailing the second to the which third and our we is then both and this XX we also that really company both full get and earlier get trailing we're the be lender on and calculation. which slower quarters full

stage. I this the it So I at that's can think answer best way

Operator

further at questions to remarks. turn There Mr. this over Dickinson you. like the time. closing to are call for would back no I Thank

Ian Dickinson

everybody you and attention. for your thank fourth and Well appreciate certainly quarter at it to forward time look appreciate your you and attention. very time again end of We we the talking and much again the to

Operator

This you. teleconference. Thank today's concludes

you a at You Thank for may day. lines your have time. disconnect your wonderful this and participation

Enservco (ENSV) 14 Nov 172017 Q3 Earnings call transcript